The Depository Trust and Clearing Corporation (DTCC) has a sandbox.
The DTCC Digital Launchpad will be an open ecosystem where market participants and technology providers can launch pilots that will have a clear path to production. This comes after a successful proof-of-concept led by the Japan Securities Clearing Corporation (JSCC).
Sandboxes save participants money
The DTCC has invited a group of participants to the Digital Launchpad to develop initiatives that address critical collateral management pain points and lead to scalable solutions. Their results will be publicized in the first quarter of 2025.
At the same time, DTCC clients will have access to the DTCC Digital Assets suite of products within the sandbox, allowing them to develop their own “use cases without substantial investment.” They can receive guidance and support from DTCC as they do so.
Global head of DTCC Digital Assets Nadine Chakar said in a statement that DTCC was seeking to challenge the digital asset industry’s “siloed approach.” She added:
“The ultimate objective of DTCC Digital Launchpad is to bring the industry together to build production-ready, secure, and efficient digital market infrastructure and standards that will transform capital markets for generations to come.”
Related: Digital Asset’s Canton Network tokenizes gold, Eurobonds, gilts
Working toward better collateralization
The DTCC and JSCC completed a proof-of-concept for the Digital Launchpad. That project examined the potential role of digital technology in collateral management, focusing on central counterparties and successfully showing an improvement in speed and transparency.
JSCC was able to mint tokens representing cash, stocks and bonds using DTCC infrastructure. Smart contracts were used to integrate margin calls and the deposit or withdrawal of digital assets, according to a white paper.
In September, the DTCC and Digital Asset completed a pilot project called US Treasury Collateral Network on the Canton Network with 26 market participants carrying out 100 transactions.
In 2023, DTCC subsidiaries processed $3 quadrillion in securities transactions. Its depository subsidiary, the Depository Trust Company, provided custody and servicing valued at $85 trillion for securities issues from over 150 countries and territories.
The Scoop
DTCC Digital Launchpad: A New Era for Digital Asset Innovation
The Depository Trust and Clearing Corporation (DTCC) has launched the Digital Launchpad, an innovative sandbox designed to foster collaboration among market participants and technology providers. This initiative aims to develop scalable solutions for critical collateral management challenges following a successful proof-of-concept with the Japan Securities Clearing Corporation (JSCC).
Cost-Effective Collaboration
By inviting a select group of participants to the Digital Launchpad, DTCC is creating a platform where initiatives can be tested and refined without substantial financial investment. Participants will have access to DTCC’s Digital Assets suite, enabling them to develop unique use cases with expert guidance.
Bridging Industry Gaps
Nadine Chakar, DTCC’s Global Head of Digital Assets, emphasized the need to overcome the digital asset industry’s “siloed approach.” The ultimate goal of the Digital Launchpad is to unify the industry, establishing secure and efficient digital market infrastructure and standards that can transform capital markets for generations.
Focus on Collateral Management
The recent proof-of-concept by DTCC and JSCC showcased how digital technology can enhance collateral management, particularly for central counterparties. The project successfully demonstrated improved speed and transparency in operations, enabling the minting of tokens for cash, stocks, and bonds through smart contracts that automate margin calls and asset transactions.
Looking Ahead
The results from the Digital Launchpad are expected to be publicized in the first quarter of 2025, marking a significant step towards advancing digital assets and collateral management in the financial industry. As DTCC continues to lead in processing a staggering $3 quadrillion in securities transactions annually, this initiative is poised to make a lasting impact on the future of capital markets.
